Blumenthal Probes Lease Deal

`Strong Appearance That Someone Lied'

January 23, 2001|By JON LENDER; Courant Staff Writer

Saying there is ``a strong appearance that someone lied to an attorney in this office,'' state Attorney General Richard Blumenthal ordered his office's whistleblowers unit Monday to investigate questions surrounding the controversial backdating of a provision in the states' lease of offices in Windsor.

Blumenthal was reacting to Monday's disclosure of the state auditors' finding that the backdating of a tax-relief clause in the lease could provide a $350,000 rent windfall for the landlords -- who include a couple with personal and political ties to Gov. John G. Rowland and his wife.

``We're beginning [an] investigation to determine who knew what, when,'' Blumenthal said in an interview. The whistleblowers unit, whose job it is to investigate possible wrongdoing in state government, ``has the power to subpoena witnesses, take statements and testimony under oath,'' he said.

Blumenthal said that the probe, which may take two months or more, is intended to determine ``who knew what, and when they knew it, and what was said.''

The backdating of the tax clause in the lease occurred in the final preparation of the document for signing in May 1998 -- and the alteration was actually done by Michael Arcari, an assistant attorney general from Blumenthal's office assigned to assist the Department of Public Works.

But Arcari has told the state auditors that a leasing agent in Public Works, Georgianne Killeen, sent him a copy of a letter from the landlords' lawyer requesting the change in the tax clause -- with a notation that a representative of the State Properties Review Board said it was ``O.K.''

The board representative denies giving his approval.

The $838,000-a-year leasing deal in question was signed May 20, 1998, providing offices for an agency called the Board of Education and Services for the Blind. It is a five-year deal, renewable for another five years.

Two months before the deal was signed in 1998, the general partner of the building's ownership group, Allicia Wertheim, co-hosted a $500-a-person fund-raiser at her West Hartford home that pulled in more than $23,000 for Rowland's 1998 re-election campaign. Rowland attended, and so did P.J. Delahunty, the deputy public works commissioner who later signed the deal. In June 1998, Wertheim's husband, Mark, was given a 50th birthday party at the governor's residence in Hartford.

Rowland and his press spokesman have said politics and friendship had nothing to do with the deal.

The current problem over the tax clause originated in the months leading up to the 1998 signing. The Department of Public Works negotiated the lease with the building's owners, and the terms were approved by the watchdog State Properties Review Board. State law requires that the final copy of the lease reflect exactly the terms as approved by the watchdog board -- with no changes.

But in this case, a standard tax clause was altered. As approved by the watchdog board, the provision said that the state would pay, as additional rent, any increased town property taxes above the landlords' tax bill in the first year of the lease.

That ``base tax year'' was approved by the board as 1999 -- when the Windsor property tax bill was $87,453. But, after the board's approval, Arcari changed the ``base tax year'' in the final lease -- again, he says, based on the document submitted by Killeen -- to 1996, when the town tax bill was $51,744.

Based on that altered clause, when the landlords paid their 1999 Windsor property tax bill of $87,453, they asked the state for the $35,709 difference between that 1999 bill and the lease's ``base'' 1996 tax bill of $51,744.

But then the State Properties Review Board heard of the backdating and objected. So far the state has withheld payment of added rent while the matter has been in dispute.

The owners have filed a formal demand with the state's claims commissioner for the additional rent. If they win, the state's rent would increase by $35,709. Applying that increase to the 10 years that the lease could be in effect would mean $350,000 in added rent, auditors said.

``This office will continue to block any payment of additional rental money'' in the pending proceeding before the state claims commissioner, Blumenthal said. But it will no longer be Arcari who is representing the state in that proceeding.

Blumenthal said that because of Monday's publicity, ``to avoid any appearance of a conflict of interest'' he was replacing Arcari in that proceeding with another attorney from his office, whose normal duties have nothing to do with Public Works.

He said Arcari may be called as a witness in the investigation and thus should not participate in the dispute. But he defended Arcari, citing the ``possible misrepresentations'' on which he based his actions. Blumenthal said his office no longer takes Public Works' word on such matters, and always checks with the review board.

Public Works Commissioner Theodore Anson said Monday he was surprised to learn of the backdating more than a year ago, and had questioned it. He said he will meet with department officials today to ``try to reconstruct'' the situation.